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Trade of the week
Short EUR/CHF
After last week's multi-month high in EUR/CHF, marked by negative RSI divergence near previous highs, we're shorting EUR/CHF with a stop loss at CHF0.9450 and a target between CHF0.9340 and CHF0.9320.
(AI video summary)
Current trade overview
We're focusing on a short position in EUR/CHF, based on a technical setup suggesting potential for a trend reversal.
Trade setup
- Entry point: current levels around the time of the analysis
- Stop loss: approximately 0.9450
- Target: between 0.9340 and 0.9320
Risk-reward ratio
For this trade, the ratio is favourable due to strategic positioning near historical resistance and support levels.
Market context
Last Friday, EUR/CHF made a higher high compared to earlier in the week without a corresponding increase in the relative strength index (RSI), indicating negative divergence. Historically, this leads to a trend reversal in about 65 to 70% of cases. The pair is also in a historically tested resistance zone, noted in late April and previous highs from January, December, November, and September of 2024.
Cautionary note: while this trade presents a structured opportunity, market conditions can change rapidly. Traders are advised to consider their risk tolerance and market outlook before engaging in this trade.
Important to know
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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